Housing market slips, valuations rise

Slowdown poses new reality for buyers, sellers in region

December 30, 2005|By JUNE ARNEY | JUNE ARNEY,SUN REPORTER

Fat bonuses for buyers' agents. Thousands of dollars for closing costs. Prizes at open houses. Price cuts.

Welcome to the new reality of the Baltimore real estate market.

The double-digit price gains of the past few years continue to hold, but the froth is gone. Homes are going on the market faster than they are selling. Realtors no longer lament a "lack of inventory." Sellers no longer can expect a flood of offers and even bidding wars. As a result, marketing strategies that have lain dormant for years are again popping up.

Chad Dillard doesn't need anyone to tell him that the sizzle has evaporated.

He chopped $14,100 off the asking price for the Homeland semi-detached just 30 days after listing it for $299,000 in late September, and now his agent is hinting at another cut.

Dillard, who had watched Baltimore friends lose out on house after house in a hot market, never expected to have a problem selling.

"It surprises me. I just didn't suspect that was happening," said Dillard, 38, a hospital marketing executive who moved to Oregon in October. Now, paying the mortgage on a home he no longer occupies, he says, "I've gotten more anxious."

Nationally, sales of existing homes declined in November for the second month in a row while prices maintained double-digit annual gains, the National Association of Realtors reported yesterday. Home sales dropped 1.7 percent to a seasonally adjusted annual rate of 6.97 million units in November from 7.09 million in October.

In the Baltimore region, sales fell in every jurisdiction, including the city, where the drop was the first in three years. The number of homes for sale in Baltimore and the five surrounding counties more than doubled from a year earlier, to 10,913, according to Metropolitan Regional Information Systems Inc., a Rockville company that tracks homes sold through the multiple-listing service.

And with mortgage rates edging up, industry forecasts call for housing sales to dip in 2006 after five straight record years.

"It's changed to a buyer's market," said Laurie W. Atkinson, an agent with Coldwell Banker in Towson. "A lot of people are cutting their prices after 30 days. "You didn't see that before. Bonuses are back. If they're not offering, people are asking for closing costs."

To generate traffic for homes she lists, Atkinson is planning to hold drawings at open houses. She'll offer prizes of cameras, televisions and other small electronics at the midweek events for other agents and $150 restaurant gift certificates at Sunday open houses for the public.

Al Ingraham, president of the Maryland Association of Realtors, said the slowdown is especially evident with higher-priced homes.

"There are fewer buyers out there for the three quarters of a million dollars and up houses, so those houses tend to stay on the market longer - twice as long as a year ago," he said.

In Howard County - where the average sale price was $445,389 in November, the highest in the region - Realtors say the shift is unmistakable.

"It's definitely slowing, and people are going to have to realize they may have to lower prices," said Melvina Brown of Re/Max 100 in Ellicott City and past president of the Howard County Association of Realtors. "People ... realize the houses are not moving like they did last summer."

As a result, sellers and agents are making compromises to move houses.

Brown had clients whose five-bedroom colonial in Columbia, listed for $699,900, had languished on the market for more than a month. When a buyer offered to pay full price if they would hold a second mortgage of $100,000 for two years, they agreed.

Saundra Barrett and her husband cut $20,000 off the $699,900 price of their five-bedroom home, also in Columbia, which drew just five people per month since being listed in September.

"I wasn't happy about it, but we did it," Barrett said.

On top of that, her agent has altered the commission structure to give a buyer's agent an additional half-percent. And if the house doesn't sell soon, the Realtor is planning to hold drawings for $100 at midweek open houses.

The owner of a new home near Worthington Valley listed at $1,199,000 last month offered a $10,000 bonus to the agent representing a buyer. Now he's offering $25,000 in closing costs, said Jack Fattes, a Realtor with Long & Foster in Burtonsville who represents him.

"I knew the market was slowing down, and we had to get some attention," Fattes said, noting that about 25 homes of comparable price were for sale in the same area.

That's true for many neighborhoods - another sign of a slowing market.

"Right now, there are a lot of houses in the same area on the market," said Debbie Meister, a Realtor with Long & Foster in Canton. "We have a lower volume of buyers and higher listings. Sellers almost have to do more, because the market has shifted."

For instance, Meister listed a house in the Patterson Park area at the end of September for $268,900, when 11 other houses within four blocks on the same street were for sale.

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